ACA Road to Repeal: What Does Repeal and Replace Really Mean?

A new year, a new Congress, a new president, and a new administration all mean compliance changes for employers. In particular, the Republican sweep of the election means that we can expect some very substantial changes coming out of Washington in the upcoming months and years, including to the Affordable Care Act (ACA). For example, what's the future of the ACA, and what should employers do during this time of uncertainty?

Compliance remains a top priority in this uncertain and very fluid environment, and organizations should focus on continuing to meet all key compliance milestones until definitive changes and their implications are fully known, in place and understood.

Here are four key items we believe should be on every organization's radar:

Repeal. Republicans are laying the groundwork to repeal key ACA provisions. Many Republicans, including President Donald Trump, are acting quickly to deliver on prominent campaign promises to repeal the ACA. Expect executive action through the issuance of Executive Orders in the opening days of the new administration and legislative action. Right now, it's clear that repeal-oriented action will be taken, but exact details have not been announced and some parts of the ACA will remain. The slim majority that Republicans have in the Senate is important to note, because it affects the legislative options that Republicans have available to them. How will repeal happen?

Reconciliation. As expected, budget reconciliation is the process Republicans are using for repeal. Reconciliation bills can't be filibustered and can pass with a simple majority. Reconciliation can be a fast track process, but only components of the ACA with direct federal budget implications (i.e., spending or tax) can be changed through reconciliation. Consequently, only a partial repeal of the ACA can be achieved through reconciliation, such as elimination of the Medicaid expansion, federal financial support for Exchange coverage, and the individual and employer mandate penalties. Even after a reconciliation bill is enacted into law, Congress must determine what comes next.

Replace. Republican leaders are saying that they will offer a replacement plan that will take effect after a transition period. During the transition period, the current law will likely remain in place. One of the key points of debate in Congress is how long the transition period should be. There is no consensus on this question yet, but some transition period will be required and employers will likely continue to have reporting and other ACA responsibilities. In recent days, some Senators and President Trump have stated that repeal and replacement should occur simultaneously. Though a detailed replacement plan has not been announced, expect details to start emerging. ACA replacement will be complex and require legislative action and bipartisan cooperation. Practically, it is unclear how soon a detailed replacement plan can be ready to be considered by Congress.

Relax. Admittedly, "relax" isn't part of the ACA vocabulary, but as the new administration continues to work through the complex policy and political ramifications of deciding what's next for the ACA and Health Care Reform, employers should continue to comply with existing requirements and stay informed.

The news cycle continues to accelerate rapidly. In addition, some of what is reported in the media is surface-level or incomplete, making it understandably difficult for busy business leaders to keep up with the facts on important issues much less determine what must be acted upon and when vs. what is not ready for action.

To help you stay informed during this time of significant transition in Washington, here are some immediate resources to keep you current:

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